Last week, we wrote about a unique automobile that sparked a legal battle and ultimately fell into the wrong hands due to a lack of planning. We encouraged everyone who owns any kind of special item to plan now to avoid expense and stress later. This is especially true for collectible items, such as art, coins, stamps, antiques, etc.
Early planning for collections is crucial due to tax and valuation issues. When a collector passes away, the IRS wants to know how much his estate is worth, including collectibles. Although it can be difficult to determine the value of a collection, it is an important consideration for both lifetime and estate planning. If you have a good idea of what the IRS thinks your collectibles are worth, your estate planning attorney will be better able to advise you on estate and gift tax considerations. Depending on your situation, you may need to consider gifting or selling your collection during your lifetime.
Of course, many collectibles hold sentimental value for their owners, making tax and market value concerns secondary to the desire to keep the collection in the family or intact. When this is the case, timely planning is again the best solution. As a first step, we recommend evaluating your family’s appreciation of your collection and their willingness to maintain it. As with all other aspects of planning, knowing your family and sharing that knowledge with your lawyer will help you get the best plan possible.